What Does the Next Generation Need to Know and Do in Manufacturing and Design?

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Subject

What Does the Next Generation Need to Know and Do in Manufacturing and Design?

Venue

JW Marriott Hotel

Date

October 17, 2011

Chuck thanks for posing such an important question. Asking the right questions is key to great leadership, which you exemplify.

Prince Charles asked an important question recently. He and Camilla were sharing a quiet glass of wine after Prince William and Kate’s wedding. Camilla suddenly said, “Oh, I love you, I love you!” Charles asked, “Is that you talking or the wine?” Camilla responded, “It’s me talking to the wine.” Clearly, how you see things depends on your perspective.

I view manufacturing as a value adding work system that turns resources into “experiences” desired by customers. I see design as a creative activity focused on ensuring these experiences are positive. My perspective is that manufacturing and design encompass all facets of customer experience, not just physical products.In this context, I learned a lot at GM about what works and doesn’t work, and distilled this to five lessons to share with the next generation.

Lesson 1:Manufacturing is an Integrated System

The first lesson is that manufacturing is an integrated system. I tell my parents: “I’m glad you named me Larry because that’s what everybody calls me!” Things aren’t quite as clear when someone refers to manufacturing. For many of us, manufacturing is much more than what goes on in factories. It includes designing, engineering, sourcing, producing, distributing, marketing and selling products. And, the best manufacturers do all of this as an integrated system.

Some of the biggest manufacturing improvements have resulted from working across disciplines and beyond walls. Examples include:

Simultaneous Engineering

Design for Manufacturing

Math-Based Design and Engineering (CAD)

Six Sigma Quality

Supply Chain Management

The Toyota Production System

Life-Cycle Analysis

We must teach the next generation about manufacturing in this broad system context. We must also emphasize that the system’s purpose is to effectively, efficiently and creatively add value that delights customers.

Lesson 2: Manufacturers Must be Driven by Customer Experiences

This purpose leads to the second lesson, which is that manufacturers must be driven by customer experiences. Customers realize value through their experiences with products and brands. Consistently positive experiences result in greater value, higher brand equity and superior prices. As such, customers must be deeply understood and their positive experiences must be explicitly designed and delivered.

To illustrate, my wife decided we should rent the movie “Titanic.” Blockbuster was out of copies so I came home with “Caddy Shack.” I forgot to return it on time and had to pay a fine. So, not only did I make two trips to Blockbuster, I paid a fine to rent a movie that was not my wife’s choice. Netflix used design innovation to replace all of these negative experiences with positive ones, and in doing so, transformed the movie rental business.

I do not mean to make light of Blockbuster’s situation. After all, I come from a company that experienced one of the biggest bankruptcies ever. And, when asked: “Why did GM go bankrupt?” I humbly tell people it is because we lost sight of our purpose and did not consistently deliver positive customer experiences. The next generation must never make this mistake.

Lesson 3: Manufactures Must Grow Better “Beans” in Addition to Counting Them

My third lesson is that manufacturers must grow better “beans” in addition to counting them. As engineers, we like to blame things on “bean-counters.” While they may be good scapegoats, we shouldn’t forget that the definition of an engineer is “someone who likes to work with numbers but doesn’t have the personality to be an accountant.”

In addition to earning and counting “beans,” the best manufacturers use their “beans” creatively to develop and grow better “beans” for their customers. My point here is that successful manufacturers must have effective operations to stay in the game and a strategy that provides a sustainable advantage to win the game. Strategies based on the innovative design of positive customer experiences typically are winners.

Such innovation is perhaps the only truly sustainable advantage for manufacturers. Consider this list of example industries that have been disrupted by technology and/or business model innovation:

Photography

Media

Entertainment

Computer

Telecom

Television

Pharmaceutical

When industries are disrupted, incumbents generally do poorly. For this reason, I feel the best approach is to “do unto yourself before others do unto you!”

Lesson 4: Manufacturing Innovation Is Still Quite Young

The fourth lesson is that manufacturing innovation is still quite young. While I have witnessed extraordinary breakthroughs during my career, the best is yet to come. Think of what might be possible from:

I sure wish I were a 23-year-old engineer looking forward to applying these opportunities to enhance customer experiences. The potential appears endless.

I have to be careful what I wish for though. This summer, I kicked a bottle on a beach and a Genie emerged and granted me one wish. I wished for world peace. The Genie said she could not grant this wish because mankind has engaged in wars since the beginning of time. So, I wished that the Detroit Lions would win the Super Bowl. The Genie thought for a minute and said, “What was your first wish again?”

Lesson 5: Engineers with Integrative Minds Will be the Leaders

My final lesson is that engineers with integrative minds will be the leaders that serve customers in ways we cannot imagine. No other discipline is capable of designing, developing and validating the integrated systems that will turn tomorrow’s science into sustainable and positive customer experiences.

Innovation and engineering are inherently learning processes aimed at reaching market “tipping points” for new ideas. The market is the ultimate scaling mechanism. Markets tip when “customer value > market price > supplier cost.” At this magic point, customers demand new experiences, manufactures supply them and transformation occurs at a scale that makes a difference. Engineers with integrative minds focused on designing and delivering innovative customer experiences have the opportunity to lead these transformations.

Closing

In closing, a pessimist sees the glass as half empty, an optimist sees it as half full and an engineer sees it as being twice as big as it needs to be!

I am an optimistic technologist by nature because I have witnessed scientists and engineers accomplish amazing things, and I have personally benefited from this innovation. Eighteen years ago I woke-up deaf. Today I hear with Cochlear Implants. And what impresses me most about this technology is how its manufacturer, Cochlear Corporation, has consistently innovated to enhance my experience. When manufacturers do this right, they create powerful brands, become formidable competitors, grow jobs and prosper. Doing it right means:

Seeing manufacturing as a system

Focusing manufacturing on positive customer experiences

Growing new “beans” as well as counting them

Realizing manufacturing innovation is still quite young

Leading with an integrative mind

The next generation needs to recognize that together, manufacturing and design are fundamental to our future. They need to know that these are exciting and rewarding fields that will positively transform how people live their daily lives. And, they must be aware that there is nothing more exhilarating than a “flash of holistic understanding in a prepared mind.” Such epiphanies are priceless.

I’ll end with a story about a young engineer in the nursery of his first newborn baby. He had a look of awe in his face. His wife hugged him from behind and said, “ A penny for your thoughts?” The engineer said, “This is the most amazing thing, how could they possibly design and manufacture this crib for only $89.50?”